1979 (10) TMI 60

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ing to T.C. No. 28 of 1976 as in the relevant appellate order giving rise to the other reference, the Tribunal merely followed the appellate order annexed in T.C. No. 28 of 1976. The assessee is a registered firm carrying on the business of manufacture and sale of silk cloth at Arni. There were five partners in this firm, namely, (i) Thiagarajan, (ii) Jagadeesan, (iii) Balasundaram, (iv) Alagesan and (v) Smt. Pattammal, each having an equal share. The first four are brothers and Smt. Pattammal is their mother. There was another firm known as M/s. Somasundaram and Brothers at Arni consisting of Alagesan, one of the partners of the assessee-firm, one Manivannan and five minor sons of Jagad Thiagarajan and Balasundaram. The minors have b....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....as only a little higher than what had been granted to others and that the time for clearing the bills was also a little larger in this case than in the other case. The Assistant Commissioner was of the opinion that considering the off-take by Somasundaram & Brothers, even the rebate of 9% could not be described as unreasonable or excessive. He, therefore, directed the allowance of the claim made by the assessee. The Tribunal on appeal at the instance of the ITO came to the conclusion that the was charged only on the basis of the net price realised from Somasundaram & Brothers and that the assumption that the entire sale proceeds were taxable subject to an allowance by way of a deduction of the discount was incorrect. It was, therefore, held....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e it that s. 40A(2)(b) would apply here. Section 40A(2)(a) contemplates an assessee incurring any expenditure in respect of which payment has been or is to be made to any person referred to in cl. (b) of s. 40A(2). If there were any such expenditure and if the ITO was of opinion that such expenditure was excessive or unreasonable, then so much of the expenditure as was considered by him as excessive or unreasonable was not to be allowed as deduction. We have, therefore, to consider whether there was any expenditure in the present case. It is in this context that we have to refer to the findings of the Appellate Tribunal in its order. In para. 7 of its order, the Tribunal has stated : " What happened actually was that the assessee s....